Renovations of Tosa Eschweiler buildings would require more public financing, study says

The renovation of five historic buildings at the Innovation Campus development in Wauwatosa into apartments would require a higher level of public financing than the developer's plan to preserve just one building, according to a new study commissioned by the city.

The study, by consulting firm Springsted Inc., was done in response to Mandel Group Inc's proposal to demolish two of the red brick buildings, while largely dismantling two others and converting them into public open space.

The largest of the buildings would be restored as a fitness room, community rooms and other amenities for 192 proposed apartments Mandel would develop at the site. Part of that preserved building would be used as offices for nonprofit groups and a public conference center.

Four of the Tudor Revival style buildings opened in 1912 as the Milwaukee County School of Agriculture and Domestic Economy, and were designed by noted architect Alexander Eschweiler. His work includes the former Wisconsin Gas Co. headquarters, 626 E. Wisconsin Ave., and a mansion that now houses the Charles Allis Art Museum, 1801 N. Prospect Ave.

The other building, a power plant, was built in 1936. All five buildings, which sit on a hill east of U.S. Highway 45 and south of Swan Blvd., are designated as historic by the city. The buildings have been vacant for several years.

Financing would include a $32.5 million bank loan, $5.7 million in equity and $1 million in deferred developer fees for Mandel, leaving a $2.5 million gap that would come from city funds.

Those city funds would be repaid through property taxes generated by new development at Innovation Campus, including the planned new Milwaukee-area headquarters for ABB Inc. The Common Council in 2010 created a tax incremental financing district to help pay for development at Innovation Campus, previously known as Innovation Park, which includes the historic buildings.

The cost of converting all five historic buildings into 41 apartments, and building another 168 apartments at the site, would total $46.1 million, Springsted concluded.

Financing would include a $30.8 million bank loan, $5.5 million in equity, $1.1 million in deferred developer fees, and $2.1 million in federal and state historic preservation tax credits.

That would leave a $6.6 million gap, the study said.

"Based on our review of the financial components of the project, we can determine that it would be reasonable to assume that the developer would need financial assistance to proceed with the preservation of the historic buildings," the study said.

Restoring all of the historic buildings "could be considered significantly more infeasible
than demolishing the buildings, due to the increased project costs and corresponding financial gap," the study said.

The study was to be presented at Wednesday night's meeting of the Wauwatosa Historic Preservation Commission. Mandel needs commission approval for demolishing or renovating the buildings, but the development firm could appeal a commission denial to the Common Council.

Mandel has an option to buy the eight-acre site from a University of Wisconsin-Milwaukee Foundation affiliate for $4 million. UWM Foundation is overseeing the development of Innovation Campus.

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The council on Tuesday voted 10-5 to support the project, falling two votes short of the supermajority needed for approval. The zoning change needed 12 votes because a protest petition was signed by enough adjacent property owners, said Ald. Ashanti Hamilton, council president.

The opponents were Ald. Robert Bauman, whose district includes the site, along with aldermen Cavalier Johnson, Mark Borkowski, Jose Perez and Tony Zielinski.